A few weeks ago, Broadcom released a new version of its end user agreement (EUA), which, amongst other things, includes its core business terms (Foundation Agreement) and end user license agreement (Software Module). You can see our previous blog post on Broadcom’s precise contractual order of precedence.
What we’re going to focus on in this post are three significant changes that have shifted the ground for enterprises and should sound a note of caution for any organisation that is going to be transitioning into a new Broadcom agreement or renewing an existing one.
1. Removal of Termination for Convenience
The removal of the termination for convenience clause is the most consequential change and should make procurement teams pause for thought, especially given that Broadcom in its VMware negotiations is pushing more organisations towards longer renewal terms, where possible.
Up until the latest version of the agreement, sections 10.4 – 10.5 gave customers the right to terminate any order without cause, at any time, without further charge, and receive a pro-rata refund of pre-paid fees for the remaining term. This would be predicated on the customer removing all software from its systems and certifying that it had done so to Broadcom.
This right has now been eliminated. The new language states in section 10.4 that a customer “agrees it cannot terminate this Agreement or any Order hereunder without cause and receive a pro-rata refund,” notwithstanding any other legal or equitable right. It also closes a workaround: if a customer has a termination-for-convenience right under some other Broadcom contract that says “terminating this deal terminates all Broadcom agreements,” the new agreement carves out that clause, so it won’t affect this agreement. So you may be able to terminate older orders, but you won’t have that same right for any covered by the new contract. Termination is now only permitted for uncured material breach or insolvency, covered by section 10.2.
Why does this matter?
The change removes a meaningful exit right and refund mechanism. If you sign up to a multi-year term and want out early, e.g., to consolidate vendors or because of dissatisfaction short of a material breach, you’d no longer get money back for unused time – you’d stop using the software but still have to pay.
2. “URL Terms” Formally Incorporated
The new agreement adds a new defined term, “URL Terms” in section 2.15, covering the Data Protection Addendum, SaaS Listings, Specific Program Documentation, Third Party Terms, and the Maintenance Policy Handbook – all hosted externally. Section 2.1 also expands the definition of “Agreement” to explicitly include these URL Terms.
Why does this matter?
More of the binding contract now lives on web pages Broadcom controls and can update arbitrarily, rather than in the signed document itself. Amendments to the core agreement still require mutual written consent (section 12.1), but it’s less clear whether updates to these linked policy pages count as “amendments” – it’s worth keeping a close eye on these documents, to see if any revisions could impact you.
3. Expanded Scope of Mandatory Compliance Reporting
Previously, the mandatory compliance reporting requirement applied only to products from the VMware Cloud Foundation division of version 9 or higher (e.g., VCF, VVF and vSAN). The new agreement now expands this scope to cover the VMware Application Networking and Security (ANS) business unit, specifically the products vDefend v9+ and Avi Load Balancer v32+.
Why does this matter?
If you use those products, you will now need to meet the same automated compliance-reporting obligations that previously applied only to VCF, with the same risk of losing access to updates / patches if you don’t submit the required reports.
Conclusion
These changes, as ever, reflect Broadcom’s strategy to lock customers into longer agreements and make it harder than ever to extricate themselves. The inclusion of URL terms into the core agreements by reference means that customers will have to be vigilant in keeping abreast of changes, whilst the expansion of mandatory compliance reporting demonstrates Broadcom’s push to get customers to purchase vDefend and Avi Load Balancer (we’ve seen a lot of this at bedigital), whilst making it more challenging to avoid audit. In our previous blog on this subject, we cover the draconian audit right on five days’ notice included in the Order Form text.
If you need support with VMware licensing, either because of an impending renewal or audit, or simply because you want to look at optimising, get in touch to speak with one of our experts at bedigital.
